The foundational first step in any strategic sourcing initiative is to conduct a comprehensive spend analysis. This involves systematically gathering, cleansing, and classifying expenditure data by category for all business units. This analysis provides critical visibility into what the organization is buying, from which suppliers, and at what cost. This baseline understanding is essential for identifying savings opportunities, consolidating purchasing power, and developing an informed sourcing strategy. Subsequent steps, such as market analysis and supplier engagement, are predicated on the insights gained from this initial data-gathering phase.

A. Contacting vendors for bids is part of the supplier selection (RFx) phase, which occurs much later in the process, after a sourcing strategy has been developed.

C. Identifying existing contracts is a component of the overall spend analysis, but it is not the complete first step, which must encompass all spending data.

D. Developing supplier performance measures is part of the contract negotiation and supplier relationship management stages, which follow the initial data analysis and sourcing event.

1. U.S. Government Accountability Office. (2012, July). STRATEGIC SOURCING: Leading Commercial Practices Can Help Federal Agencies Increase Savings (GAO-12-677). In Figure 1, "A Seven-Step Strategic Sourcing Process," the first step is explicitly defined as "Analyze agency-wide spending" (p. 8).

2. Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). Purchasing and Supply Chain Management (6th ed.). Cengage Learning. Chapter 7, "The Strategic Sourcing Process," outlines the initial steps as building a team and conducting market intelligence research, which is fundamentally driven by a detailed spend analysis to understand the current purchasing profile before engaging the market.

3. Smeltzer, L. R., & Siferd, S. P. (1998). Proactive supply management: The management of risk. International Journal of Purchasing and Materials Management, 34(1), 38-45. The article emphasizes that strategic supply management begins with a thorough analysis of the firm's expenditures (spend analysis) to identify critical categories and formulate appropriate strategies.